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The price responsiveness of shale producers: Evidence from micro data

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  • Knut Are Aastveit
  • Hilde C. Bjørnland
  • Thomas S. Gundersen

Abstract

We show that U.S. shale oil producers exhibit a high degree of short‐run price responsiveness, primarily through the timing of well completions and refracturing. Using a novel monthly well‐level panel covering over 120,000 shale wells across ten states from 2005 to 2019, we document significant supply adjustments to price signals. The response varies significantly across states and firm types, highlighting the importance of accounting for micro‐level heterogeneity in production behavior. Mechanisms include accelerating completion of drilled but uncompleted wells and refracturing older wells when forward‐looking price signals are favorable. These findings challenge the common assumption of short‐run supply inelasticity and call for oil market models that incorporate operational flexibility and forward‐looking behavior of shale oil producers.

Suggested Citation

  • Knut Are Aastveit & Hilde C. Bjørnland & Thomas S. Gundersen, 2026. "The price responsiveness of shale producers: Evidence from micro data," Quantitative Economics, Econometric Society, vol. 17(2), pages 394-430, May.
    • Handle: RePEc:wly:quante:v:17:y:2026:i:2:p:394-430
    DOI: 10.3982/QE2544
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    1. is not listed on IDEAS
    2. Adolfsen, Jakob Feveile & Heissel, Malte & Manu, Ana-Simona & Vinci, Francesca, 2024. "Burn now or never? Climate change exposure and investment of fossil fuel firms," Working Paper Series 2945, European Central Bank.
    3. Storrøsten, Halvor Briseid, 2024. "U.S. light tight oil supply flexibility - A multivariate dynamic model for production and rig activity," Energy Economics, Elsevier, vol. 131(C).
    4. Kumar, Abhishek & Mallick, Sushanta, 2024. "Oil price dynamics in times of uncertainty: Revisiting the role of demand and supply shocks," Energy Economics, Elsevier, vol. 129(C).
    5. Jon Ellingsen & Caroline Espegren, 2022. "Lost in transition? Earnings losses of displaced petroleum workers," Working Papers No 06/2022, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    6. Valenti, Daniele & Bastianin, Andrea & Manera, Matteo, 2023. "A weekly structural VAR model of the US crude oil market," Energy Economics, Elsevier, vol. 121(C).
    7. Ioannis Arampatzidis, 2026. "Shale oil revolution, the global oil market and the US economy," Empirical Economics, Springer, vol. 70(1), pages 1-24, January.

    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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